City of Bend and federal officials have big expectations for a new program to spur affordable housing launched last week, when the city learned it was one of 21 cities nationwide to receive millions in first-of-its-kind federal funding.

The $5 million award is the largest housing grant Bend has ever received. It will allow the city to take a deep dive into the policies hindering housing construction and create a fund to fuel the development of lower-cost units.

During an event celebrating the award in downtown Bend on Tuesday, Solomon Greene, who leads policy and research development at the U.S. Department of Housing and Urban Development, said evidence shows Bend’s plan will “move the needle dramatically on housing production and affordability in the city” if the city can achieve its goals for the grant.

“While Bend faces a rapid growth that is at the heart of the challenges that are mentioned in the grant, you are also small enough and proud enough of a community to come together and do something really, really big,” Greene said in a Tuesday address to local elected officials, city staff and others.

Last week, the federal agency announced $85 million in grant funding for 21 local governments, from New York City to Ketchum, Idaho. The grants are brand new investments created by the Biden-Harris administration tailored specifically to help cities boost housing supply.

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Bend awarded $5 million federal grant to fuel affordable housing production

Since 2004, the federal housing agency has awarded Bend $6 million in grants for community development, which the city can pass on to affordable housing builders. The city has also subsidized down payments for first-time homebuyers, enacted a new fee on building permits to pay for affordable housing, and removed development fees from affordable housing construction projects.

Mayor Melanie Kebler said she views Bend as a trend-setter in housing solutions. But the investments and policies haven’t gone far enough, she said.

“Our housing market can be adequately summarized with expensive and exclusive, still far too exclusive for too many people in Bend,” Kebler said.

Need: more housing

The city’s housing department estimates the need for thousands of affordable housing units in Bend to accommodate growth. A 2023 investigation by The Bulletin found that many of the units the city facilitated as part of a two-year affordable housing goal became stuck in the permitting process.

Never before has the city completed a comprehensive analysis — from land-use planning to permitting — of the policies that determine where and how quickly lower-cost housing is built, Kebler said. The city doesn’t have solid data on rentals and homeownership in the city, she said.

“Having that really helps us see, OK, where exactly can we make changes and then also measure — did it help,” Kebler said in an interview.

Megan Perkins, mayor pro tem, called the new federal grant a “game-changer.”

“It means we can do so much more for our affordable housing landscape, and we can get more affordable homes built,” she said.

That won’t happen immediately, said Melissa Kamanya, affordable housing coordinator with the city of Bend. It’s been decades since the last time house building kept pace with growth in Central Oregon, she said.

“When we’ve had periods in Bend where development has stalled or slowed, the population hasn’t stalled or slowed,” she said.

What the money will do

The city will carry out the program over the next six years, starting by hiring a consultant to comb the city’s code for obstacles to development. The city will also establish a new fund to subsidize land acquisitions and infrastructure called the Revolving Loan Fund. After an initial dose of grant money, the fund should eventually sustain itself through loan repayments, Kamanya said.

Bend initially requested $10 million — twice the amount it received — to start the project. That means the city will have to scale back its scope, including first investments into the loan fund, Kamanya said. The city’s application pegged its affordable housing project as a $20 million endeavor, funded also through city fees and other grants.

Bend is still eligible to apply for the second round of affordable housing funding later this year. The Department of Housing and Urban Development plans to dish out another $100 million through the same program.